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Introduction

New Clicks is acutely aware of its responsibility to focus on the non-financial drivers of its business to ensure the longer-term sustainability of the group and the communities it serves.



Bertina Engelbrecht
B Proc, LL M,
admitted attorney
Group human 
resources director

Joined the Group in July 2006
Previously general manager
Shell SA Energy


Permanent staff     2006   2005  
Staff complement at the start of the year     8 947   9 011  
Add: Recruitments     2 252   1 727  
Less: Resignations     (1 683)   (1 354)  
  Deaths     (35)   (27)  
  Dismissals     (314)   (294)  
  Retirements     (17)   (25)  
  Retrenchments     (92)   (91)  
Staff complement at the end of the year     9 058   8 947  
Casual staff            
Number of staff at 31 August 2005 2 719          
Number of staff at 31 August 2006 3 421          

As a committed corporate citizen, New Clicks seeks to develop mutually constructive and beneficial relationships with its stakeholder base. Primary stakeholders of the group include shareholders, customers, employees, suppliers, government, labour, media and the community.

While there are no formalised management systems to monitor or measure New Clicks’ social, economic and environmental impact, the group has made steady progress over the past year in engaging with stakeholders across a broad front and in particular addressing sustainability issues relating to employees. The group recognises that employees’ well-being is critical to the delivery to all other stakeholders.

Employees

One of the three key medium-term goals identified by the new management team is to ensure New Clicks has competent and motivated people working in the group. During the year the human resources (“HR”) function was repositioned and strengthened through the establishment of a centralised HR department. This included the appointment of a group HR director, Bertina Engelbrecht. The status of the function has also been elevated, with HR now being represented on the group’s executive committee for the first time.

Progress against strategic HR deliverables in 2006 included:

  • an increased focus on developing a performance-based culture and delivery against business objectives;
  • implementing a leadership development workshop for the top 50 leaders across the group to ensure strategic alignment and cross-functional teamwork;
  • a significant increase in the number of learnerships from 108 to 381;
  • a shift towards a more constructive and interactive relationship with trade union representatives;
  • establishing New Clicks as an employer of choice in selected candidate and graduate markets, including pharmacy; and
  • development of an employee wellness programme.

The group has complied with the requirements of all employee-related legislation, including the Basic Conditions of Employment, the Labour Relations, Employment Equity and Skills Development Acts.

Employment equity

The group’s HR policies favour the empowerment and advancement of previously disadvantaged people, with the objective of creating racial and gender equity. During the past year, black staff accounted for 82% of new appointments and 13% of management level appointments. Women made up 56% of new appointments.

Further indicators of progress towards meaningful employment equity include:

  • black staff comprise 86% of the total staff complement (2005: 85%);
  • women comprise 60% of staff (2005: 61%);
  • 71% of management are black (2005: 69%);
  • 60% of management are women (2005: 59%); and
  • 20% of directors are black (2005: 25%), with one female director.

Employee development

All staff development and training is co-ordinated by the New Clicks Skills Development Unit (“SDU”) which is an accredited training provider. The SDU is registered with both the Wholesale and Retail Sector Education and Training Authority (“SETA”) and the Health and Welfare SETA.

New Clicks invested R15.8 million – the equivalent of 3% of the basic payroll cost – on training and skills development during the year. A total of 1 382 delegates attended training courses, amounting to 15% of the total workforce. The group again qualified for a full refund under the Skills Development Levy and these funds were reinvested in training.

Through an educational assistance scheme, 101 employees received financial support totalling R449 000 for tertiary education, management development and job-related skills development programmes. Study loans are provided to employees and repaid over the duration of the course. The total cost is reimbursed on the successful completion of a course.

Leadership development

The group offers two formal programmes aimed at developing leadership potential:

  • The Management Development Programme focuses on leadership development, communication and interpersonal skills, people development, performance management, teamwork and values. 16 courses were presented, attended by 122 delegates.
  • Retail Business School is a five-day course which promotes a broader understanding of the business environment within New Clicks, the country and globally. Subjects are jointly presented by industry authorities or academics, together with in-house experts. Modules include strategy and organisation, economics, finance, marketing, merchandise management and retail operations. 86 members of middle to executive management attended the three courses during the year.

Employee wellness

A comprehensive employee wellness programme has been introduced to provide a free counselling and advice service to employees. The main elements of the programme include:

  • a 24-hour toll-free helpline providing assistance on substance abuse, family support, legal advice and money management;
  • personal counselling by professional clinicians for employees and families;
  • trauma debriefing and counselling;
  • lifecare counselling and awareness;
  • HIV/AIDS disease management; and
  • occupational health.

HIV/AIDS management

New Clicks is exposed to the HIV/AIDS risk from both employees and customers. No formal assessment has been commissioned on the impact of the disease on the group’s business and its customer base. However, the group serves a wide range of socio-economic groups given the diversity of its operations and the target markets of the respective businesses. It is therefore assumed that the published national and provincial HIV/AIDS prevalence rates apply to customers and employees alike. Accurate figures of HIV/AIDS infection rates among employees are not available owing to the confidential nature of the HIV status of employees.

An HIV/AIDS employee impact assessment was undertaken by Metropolitan Life. Staff sensing surveys were also conducted to understand the priority areas in the management of HIV/AIDS for employees. This preliminary research indicated the need for a more holistic approach to HIV/AIDS management rather than a limited focus on prevention through education and condom distribution.

As outlined above, the group has incorporated the management of HIV/AIDS into its employee wellness programme, recognising that the disease cannot be managed in isolation of other employee health issues. The disease management programme is co-ordinated by Qualsa, an accredited managed healthcare provider.

Environment

An environmental policy has been developed and approved by the board, outlining the group’s commitment to meeting the needs of customers and staff in an environmentally sound and sustainable manner. An environmental forum was established during the year to create an awareness of environmental conservation and co-ordinate programmes, including ways to conserve energy, optimise water usage, minimise waste and encourage recycling. Specific energy and water-saving measures were introduced at head office and stores during the year.

Occupational health and safety

The group has implemented a social, health and environmental (“SHE”) policy, as required by King ll. Compliance with the Occupational Health and Safety Act (“OHSA”) focuses mainly on the group’s retail distribution centres located in Cape Town, Durban and Johannesburg, while UPD has branches in Lea Glen (Gauteng), Cape Town, Bloemfontein, Durban and Port Elizabeth.

All employees and contractors in the distribution centres have undergone a SHE induction course and safety representatives have been appointed in all distribution centres. Emergency teams have been appointed, while fire and emergency drills take place regularly.

The National Occupational Safety Association (“NOSA”) has conducted safety, health and environmental audits at the distribution centres. The Montague Gardens distribution centre in Cape Town achieved a five star NOSA rating.

Compliance certificates have been issued by the Automatic Sprinkler Inspection Bureau, confirming that fire protection services are in sound condition.

Black empowerment procurement

The Transformation committee of the board monitors the group’s black economic empowerment (“BEE”) strategy, covering ownership and control, employment equity, skills development, affirmative procurement enterprise development and social development. The group commissioned independent economic empowerment rating agency, Empowerdex, to conduct an evaluation on the group’s BEE status. This evaluation has helped to guide and to start focusing the group’s BEE strategy.

The group is currently developing a BEE plan for merchandise and non-merchandise procurement. The group’s total procurement spend exceeded R8.6 billion during 2006. All major suppliers have been requested to complete questionnaires detailing their BEE credentials.

UPD operates an innovative black empowerment programme where the majority of its distribution is outsourced to self-employed drivers from disadvantaged backgrounds operating their own vehicles. These owner/drivers are guaranteed a minimum workload each month and account for 80% of UPD’s total distribution volume. At year-end 120 owner/drivers were contracted directly to UPD and these drivers in turn sub-contracted a further 63 drivers.

Shareholders and media

New Clicks is committed to regular and transparent communication with the investment community and financial media. A formalised communications policy outlines the principles and practices to be followed by the group in its dealings with regulators, shareholders, analysts and media. A guiding philosophy is that all information is provided equally and simultaneously to all market participants.

The chief executive officer, chief financial officer and managing director of Clicks are the group’s designated spokesmen and are accessible to shareholders. During the year these executives held 68 meetings with local and international shareholders and analysts. No meetings are scheduled during any formal closed periods.

All investor meetings are formally documented and attended by more than one person to ensure information is not disclosed on a selective basis.

The group’s interim and final results are presented to investors and media, with presentations being held in Cape Town during the year. These presentations are followed by roadshows to sell-side analysts and institutional shareholders in both Cape Town and Johannesburg.

Results presentations were broadcast live on subscriber television for the first time this year. Presentations are webcast to broaden accessibility to private and institutional investors alike, both locally and offshore.

Shareholders are encouraged to attend the annual general meeting where the group provides an update on developments within the company and trading performance.

All information released on SENS is also distributed to an extensive database of investors and analysts globally.

Additional information which is not price sensitive is regularly communicated to investors to ensure investors are kept abreast of operational developments in the group.

The group retains the services of an investor relations consultancy to co-ordinate and advise on all aspects of the investor relations and financial communications programmes.

Corporate social investment

New Clicks is committed to corporate social investment as a means of uplifting disadvantaged communities and creating sustainable development in the country. The New Clicks Foundation has invested close to R3 million in social upliftment projects since its formation in 2002.

The Foundation supports projects that improve the lives of impoverished communities, encourage self-help and lead to personal empowerment. Increasing emphasis is being placed on social investment projects which are aligned with the group’s businesses and have a national impact.

Funding is not provided to individuals, political or religious groups, organisations with poor financial management or projects which have limited sustainability.

The activities of the Foundation are co-ordinated by a board of trustees which includes representatives of senior management and staff. The trustees determine the funding policy, evaluate requests for financial support, assess progress of current programmes and monitor the utilisation of funds.

The major projects supported by the Foundation during the year were:

  • The SunSmart campaign in partnership with the Cancer Association of South Africa (“CANSA”), aimed at promoting awareness of skin cancer and reducing incidence of the disease. This strategic partnership between Clicks and CANSA is now in its third year.
  • Through The Body Shop, the Foundation supports The Big Issue, a social development and upliftment project which assists homeless people to earn a living through magazine sales and integrates them back into the formal job market. New Clicks has invested close to R1 million in The Big Issue over the past seven years, including R100 000 this year, mainly for the development and training of vendors in Gauteng.
  • Musica continues to support DeafSA in promoting deaf awareness and generating funds for hearing-impaired South Africans. This sponsorship supports Musica’s positioning as The Soul Store by assisting people who are unable to share the experience of listening to music. Musica also supports the Noluthando School for the Deaf in the Western Cape.
  • New Clicks has been one of the main supporters of the Woodstock Upliftment Project, a programme to address the social challenges facing the community of Woodstock where the group’s head office is located. Through the efforts of this forum, the Cape Town City Council has approved the establishment of the Woodstock Improvement District and levies from all business property owners in the area will now be used to improve services, including lighting, cleansing, greening and security.
  • UPD’s social responsibility programme includes an annual contribution of R30 000 to the SA Pharmacy Council bursary fund which covers the training of five Bachelor of Pharmacy students.

Financial support was also granted to Nazareth House, Lifeline/Childline, Education Alive, Wola Nani (for World AIDS Day), The Homestead and The Marion Institute.